Gold traded above USD 1,500 for the first time since 2013 and has gained more than the S&P 500 for
YTD2019.

Rush to Safety

Investors are buying up bonds as global trade war
fears loom large. In the USA, 10-year Treasury note
yields used to price mortgage rates and auto
loans fell to 1.595%, the lowest seen since 2016. The
30-year US Treasury bond hit 2.12%, near the
all-time low in 2016.

A popular recession gauge (the spread between
the 2-year Treasury yield and the 10-year yield) hit
its lowest level since June 2007.

Globally, monetary policy is easing with central
banks in India, New Zealand and Thailand
surprising markets with aggressive rate cuts.

Negative Yields Loom

As central banks cut rates, negative-yielding debt is ballooning. Negative-yielding government bonds now
make up 25% of USD 15 trillion of the global bond market, according to Deutsche Bank. That’s nearly triple
what it was in October 2018.

Governments are getting paid to borrow money!

Government debt in Europe and Japan offer zero or negative interest rates against a weak economic
outlook. 30-year German government bond rates went negative for the first time ever in August 2019. The
monetary situation is compounded by the risk of an uncoordinated fiscal response in Europe.

While there remains a spread between US bond yields and the rest of the world, the US economy could be
following the rest of the world towards negative rates. Already, the US Federal Reserve cut rates by 25 basis
points for the first time since the 2008 financial crisis in early August 2019.

With the escalation of the US-China Trade War, further Fed Reserve rate cuts are likely. But as the overnight
lending rate hovering between 2% and 2.25%, there is not much wiggling room to avoid a recession.

Currency Woes or Wars?

The USA labelled China a “currency manipulator” as the Chinese Yuan fell to its lowest level in more than a
decade against the US dollar. Of course, China decried the US accusation and the Yuan stabilised. The US
motive is puzzling given that the Chinese Yuan has risen 15% against the US dollar since 2001.

For now, the consensus seems to be the Yuan/US dollar exchange rate of 7 with all eyes on either direction
for increased market stress.

Sensible Steps to Take

If you are invested, consider tucking in to reduce risk exposure. If you are not, this is a good opportunity to
start building up your exposure.

At SquirrelSave, we use machine learning AI to predicts risks and returnsusing real-time data. We prefer
not to cloud our decisions with human emotions as markets face volatility. Our machine learning AI is able to
compute faster than any human manager and can recognise patterns which seem random to the human
eye. Yet, through all this market noise and chaos, SquirrelSave AI remembers you – individually – in terms of
your personal risk appetite always. It does not matter how much you have invested. Our SquirrelSave AI
treats you the same – whether you invested $100 or $1 million.

With global investment risk rising, it’s time to start your SquirrelSave portfolio. It’s when markets are trending up
that all human investors look smart It’s when markets really become volatile that the forward-looking,
disciplined and non-emotional processes make the most long-term sense and better risk-adjusted returns.